Corzine announces big budget cuts

February 27, 2008 11:06:59 AM PST

By TOM HESTER Jr.

TRENTON, N.J. (AP) - February 26, 2008 --

Gov. Jon S. Corzine on Tuesday proposed major budget cuts to key New Jersey programs, including state workers, property tax rebates and aid for towns and hospitals, calling it an agonizing bid to revamp troubled state finances.

"Frankly, New Jersey has a government its people cannot afford," Corzine said. "The budget I present today declares the time of living beyond our means is over."

The $33 billion budget proposes $2.7 billion in cuts as Corzine looks to right state finances plagued by annual budget deficits, high taxes and mounting debt. Corzine called his plan "cold turkey therapy for our troubled spending addiction."

"I am pained by the stress and anguish brought to our people's lives by the cuts proposed," the Democratic governor said. "We are positioned between a rock and a hard place."

Under the proposal:

- Property tax rebates would be eliminated for households earning more than $150,000, reduced for households earning between $100,000 and $150,000 and sliced for renters.

- State aid for hospitals, towns and cities, and colleges and would be cut.

- State workers would be laid off and offered retirement incentives, and the agriculture, commerce and personnel departments eliminated, with the goal to cut the 80,000-member work force by 5,000 workers.

- Motor vehicle agencies and state parks would have their hours cut.

- A co-payment would be implemented for Medicaid services.

"Failing to take on the tough choices will only force New Jersey into a deeper fiscal swamp and weigh down our taxpayers with more unbearable financial burdens," Corzine said. "That outcome is unacceptable."

The plan needs legislative approval. The state Constitution requires a budget be adopted by July 1. State government closed for a week in 2006 when that deadline was missed amid a dispute between Corzine and lawmakers over tax increases.

Corzine also wants to significantly increase tolls on the Garden State Parkway, New Jersey Turnpike and Atlantic City Expressway to pay at least half of $32 billion in state debt and fund transportation.

Although that plan is separate from the budget proposal, Corzine referenced legislative opposition to it and pleaded to find a way to cut debt.

"Fixing the fiscal problem without addressing debt reduction is a fiction and if we try to do that, we're misleading the public," Corzine said.

Democratic legislative leaders said they would review the cuts for possible changes, but acknowledged the need to slice spending.

"The Legislature will look through these cuts and say which ones are fair and not fair," said Senate President Richard J. Codey, D-Essex. "But these are sobering times financially. He's doing the right thing."

"It's pain that is across the board, but sadly it's necessary," Roberts said.

The budget cuts were welcomed by businesses.

"We applaud the governor for understanding the seriousness of our fiscal crisis by presenting a budget that, while tough to stomach by just about everyone in this state, will begin to repair the Carla Katz, president of the largest state workers union chapter, said the cuts would "scapegoat public workers, will hurt middle class families and fail to provide a real solution to the state's fiscal problems."

Republicans want spending cuts but blasted plans to pare rebates.

New Jersey has the nation's highest property taxes, at $6,330 per homeowner, or twice the national average. The rebates averaged $1,051 last year.

Republicans called on Corzine to find cuts elsewhere, such as eliminating the public advocate's department.

"This budget is still a pig that is ripe for roasting," said Sen. Jennifer Beck, R-Monmouth.

THE BOTTOM LINE - The $33 billion spending plan calls for about $3.2 billion in spending cuts.

HISTORY - The proposal seeks the second-largest spending cut of any budget in New Jersey history and would mark only the fourth time since 1951 that the budget will be smaller from the previous year.

PROPERTY TAXES - Property tax rebates for households that earn more than $150,000 would be eliminated. They would be cut by a third for households earning between $100,000 and $150,000 and sliced for renters.

OTHER TAXES - No new or increased taxes proposed.

SOCIAL SERVICES - A co-payment for Medicaid is proposed, and the state's FamilyCare program that provides health care for low-income workers faces funding cuts.

HEALTH CARE - Hospitals face cuts in aid.

SCHOOLS - Would get a $550 million increase in state aid. The state has been giving schools about $11 billion per year.

LOCAL GOVERNMENTS - Municipalities face cuts in state aid, which municipal officials contend could mean higher property taxes and police and firefighter layoffs.

STATE GOVERNMENT - Proposes cutting about 5,000 jobs through early retirements and layoffs for state workers. The agriculture, commerce and personnel departments would be eliminated.

LESS SERVICES - State parks and motor vehicle agencies would see reduced hours.

HIGHER EDUCATION - State colleges and universities face aid cuts.

FINISH LINE - Nothing is official until the Legislature adopts a plan and Corzine signs it. A plan must be approved by July 1.

TOLLS - Corzine also seeks to increase highway tolls to pay state and fund transportation, though that plan is separate from the budget.